Wealthy minority and women business owners work to keep contract edge

Pressure rises to restore state contracts edge given minority- or women-owned businesses

By JAMES M. ODATO, Capitol bureau

Published 11:56 pm, Sunday, January 15, 2012

Photo: PHILIP KAMRASS

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Kay Stafford, President of CMA Consulting Services, talks about her company's 25 years in business, at CMA's Latham, NY offices on Wednesday June 17, 2009. (Philip Kamrass / Times Union)

Kay Stafford, President of CMA Consulting Services, talks about her company's 25 years in business, at CMA's Latham, NY offices on Wednesday June 17, 2009. (Philip Kamrass / Times Union)

Photo: PHILIP KAMRASS

Wealthy minority and women business owners work to keep contract edge

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ALBANY --— As Gov. Andrew Cuomo attempts to dramatically increase inclusion of minority- and woman-owned businesses in state contracts, a recent law that bars the wealthiest individuals from entrance into New York's MWBE certification program is under fire.

Several representatives of minority enterprises and at least one controlled by a woman have been working behind the scenes to get the Cuomo administration to support changes in a law signed by Gov. David Paterson shortly before he left office in 2010, according to several people interviewed.

The law sets a limit of $3.5 million in personal wealth. Minority- and Woman-owned Business Enterprise certification cannot be conferred by the state on companies whose principals have amassed net worth exceeding the figure.

Consultants, lawyers and lobbyists for some former MWBE-certified businesses are trying to get the law changed to raise the limit or grandfather their clients in, or to make other considerations that will maintain their status, according to people who have been involved in private talks.

The certifications give MWBE businesses an advantage over other firms for a share of public contracts. Cuomo has directed state agencies to boost MWBE participation in state contracts and procurements to 20 percent, more than double current levels.

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CMA Consulting, based in Latham, is among the firms whose certifications are at stake and are lobbying for a change to the law; it's owned by Kay Stafford, the widow of former state Sen. Ronald Stafford. CMA did not return calls for comment, although legislative officials say they are aware that CMA's lobbyists have been seeking to rewrite the law.

Other MWBE representatives declined to discuss the matter publicly, but confirmed that the $3.5 million threshold is troubling. Two people in the MWBE community said behind-the-scenes attempts to get the law changed are under way.

Paterson's revisions to the MWBE program were the first major reforms in 20 years, and for the first time set a wealth limit. Those familiar with the law say the goal of the initiative was to preserve the MWBE program as a hand up to small companies trying to get established. The certifications were not meant to be a bonus for already-successful firms, some minority officials said; instead of trying to regain an advantage, those businesses should be subcontracting work to MWBE entities. Under the former law, Oprah Winfrey could get MWBE status for a plumbing company she owned.

"We recommended that some type of economic disadvantage requirement was advisable," said Colette Holt, a member of the team that put together a 2010 report on the status of the MWBE program in New York. The 468-page report, which concluded that discrimination may be a factor in the relatively limited business that MWBE firms were getting, led to the $3.5 million cutoff.

"I'm not surprised," Holt said about pushback from firms that are now being excluded from certification. "When you've had no standards whatever, there would be some people upset about that. These programs are for persons who are economically disadvantaged."

The report says that the percentage of contracting and purchasing dollars that New York's MWBE firms were getting was in the single digits. Cuomo has been pushing for increases since taking office and has raised the goal to 20 percent. At the same time, he's also trying to save the state money by becoming more aggressive with vendors. Some MWBE advocates worry about the "strategic sourcing" program, which is aimed at maximizing state purchasing power and increasing efficiencies in deals for goods and services.

One MWBE contractor, who asked that his name not be used for fear of losing out on state contracts, said he thinks big firms will have an advantage in getting state contracts under the program. He added that small firms can't compete against firms with political connections, lobbyists and money to spend on political candidates.